Chinese Yuan Use Slows as Economic Weakness Hurts Flow

Use of the Chinese yuan slowed in June, as economic weakness in China hurt trade flows denominated in the currency, according to the Society for Worldwide International Financing Telecommunication, or Swift.

The yuan was used in 1.72% of all transactions recorded by Swift in June, down from 1.9% in May.

“The data marks a gradual, but expected, slowdown of the currency in 2016 as it continues on its path to internationalisation,” said SWIFT in a statement.

The Chinese government has embarked on a methodical effort to give its currency a wider role in global trade and investment. The government hopes one day the yuan will become a global reserve currency like the U.S. dollar, the euro and the yen.

The efforts are working over the longer term, as use of the yuan has risen from January 2015, when it was used in 1.39% of transactions, according to SWIFT. Recently, however, a slowing economy has dampened use of the currency.

SWIFT said that the outlook remains strong, as the country has been developing a new cross-border interbank payments systems and opened clearing centers for the currency in cities such as Toronto, Budapest and Zurich.

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